Cash flow and managing growth are a key to any business. A couple weeks ago, I introduced 12 Ways to Fund Your Business Part 1. Last week I discussed Bootstrapping and Customers and Vendors to help fund your business. What are some other safe ways to add cash to your business?
Level 1 funding opportunities are low risk and highly recommended for any business. Level 2 opportunities are more expensive and a bit riskier but could be necessary in high growth situations. Finally, level 3 should be considered only after looking at options in levels 1 and 2.
|Level 1||Level 2||Level 3|
|1. Bootstrapping||5. Personal Loans||10. Asset Based Lending|
|2. Customers and Vendors||6. SBA Loan||11. Factoring|
|3. Smart Leasing||7. Private Equity||12. High Interest Credit Cards|
|4. Bank Line of Credit||8. Government
|9. Mezzanine Financing|
This week, I am focusing on Smart Leasing and Bank Line of Credit.
In business, it can make sense financially to lease vehicles and machinery instead of outright owning them. I would suggest not leasing small equipment, such as computers, because the hassle in the long run is not worth it.
Here are reasons why leasing is better.
One good rule of thumb is to apply for a Line of Credit before you need it. If you come into a cash crunch, it can become more challenging to get a Line of Credit. Why would I put the Line of Credit in such a low risk category? All businesses deal with seasonality, fluctuations in the business, and growing pains. I would not suggest using a Line of Credit that you can’t foresee paying off in the next three months. Below are the best ways to use a Line of Credit.
Once you have considered bootstrapping, customer invoicing, and vendor payment options, you should also consider getting a Line of Credit and/or leasing any vehicles and other large equipment. Once you have reviewed all of these options, you should also look into funding your business through personal loans, SBA loans, private equity funding, government grants, or mezzanine financing. Next week, we will look further some of these types of funding.
Cash flow and managing growth are a key to any business. What are some safe ways to do this? Last...
Over the last few articles, we have been going through nine ways to V-curve your business. How can...